Jersey's Civil Penalties Regime - Penalties Have Been Extended

The powers of the Jersey Financial Services Commission (“JFSC”) to impose civil financial penalties for significant and material contraventions of the Codes of Practice have been extended by the Financial Services Commission (Amendment No.7) (Jersey) Law 2018 (the “Law”) following the amendments to the Financial Services Commission (Financial Penalties) (Jersey) Order 2015 (the “Order”). The Law came into force on 26 October 2018 to bring Jersey in line with international best practice. This change has been advocated by the JFSC for a number of years following the creation of the civil penalties regime in 2014.

This Law now applies to any “principal person” of any entity which is registered under the following laws and is therefore required to comply with the corresponding Codes of Practice relevant to their activities (a “registered person”):

the Banking Business (Jersey) Law 1991;

the Insurance Business (Jersey) Law 1996;

the Financial Services (Jersey) Law 1998;

the Alternative Investment Funds (Jersey) Regulations 2012; and

the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008.

The level of penalties

The recent amendments to the Order reduced the standard of proof required from recklessness or intent to a lower standard of negligence with regard to contraventions by registered persons.

The JFSC now has the power, under the Law, to extend the civil financial penalties regime to principal persons where a significant and material contravention of a Code Practice by a registered person was:

committed with the consent or connivance of, or is attributable to neglect on the part of a principal person, or

aided, abetted, counselled or procured by a principal person.

The financial penalties are branded depending on the seriousness and the nature of the contravention of a Code of Practice. The maximum level of penalty that may be imposed on a principal person is £400,000 for the most serious contraventions. The maximum penalty for a negligent contravention by a registered person is £4 million.

The Law does not have retrospective effect and will only apply to breaches that occurred on or after, or existed and continued, after 26 October 2018.

What should be done now?

Affected principal persons should check that their insurance policies cover the costs associated with a JFSC action to impose the civil penalties under this Law.

Principal persons will need to ensure that registered persons comply with the Codes of Practice applicable to them and that their own actions or omissions do not place them under the scrutiny of the JFSC now that breaches may lead to personal civil penalties and public sanction.